Until June 2012, there was much debate in South Africa as to whether exchange control approval is a rule or an option when intellectual property is exported outside South Africa.
Until June 2012, there was much debate in South Africa as to whether exchange control approval is a rule, or an option, when intellectual property is exported outside South Africa, due to case law which conflicted with the Exchange Control Regulations.
Regulation 10(1)(c) of the Exchange Control Regulations, promulgated in terms of Section 9 of the Currency and Exchanges Act No. 9 of 1933, is aimed at the protection of South African capital reserves and provides that: “No person shall, except with permission granted by the Treasury and in accordance with such conditions as the Treasury may impose … enter into any transaction whereby capital or any right to capital is directly or indirectly exported from the Republic.”
The Supreme Court of Appeal in the case of Oilwell (Pty) Ltd v Protec International Ltd & Others, ruled on the issue of the assignment of IP from a South African resident/entity to a non-resident/foreign entity and in particular, whether approval in terms of regulation 10(1)(c) is required for such transactions.
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South Africa, Exchange Control Regulations, Currency and Exchanges Act